Test bank cost accounting 14e horgren chapter 13

To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 13 Strategy, Balanced Scorecard, and Strategic Profitability Analysis Objective 13.1 1) describes how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its overall objectives A) Strategy B) Planning C) Learning and growth perspective D) Customer perspective Answer: A Diff: Terms: total quality management (TQM) Objective: AACSB: Reflective thinking 2) In general, profit potential with greater competition, stronger potential entrants, products that are similar, and more-demanding customers and suppliers A) increases B) stays constant C) decreases D) increases exponentially Answer: C Diff: Terms: five force industry analysis Objective: AACSB: Reflective thinking 3) Which of the following is NOT a force that shapes an organization's profit potential? A) Competitors B) Equivalent products C) Bargaining power of input suppliers D) All of these answers are correct Answer: D Diff: Terms: five force industry analysis Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 4) Which of the following is a force that shapes an organization's profit potential? A) Investors B) Potential entrants into the market C) Creditors D) Research and development Answer: B Diff: Terms: five force industry analysis Objective: AACSB: Reflective thinking 5) is an organization's ability to offer products or services that are perceived by its customers as being superior and unique relative to those of its competitors A) Strategy B) Product differentiation C) Cost leadership D) The balanced scorecard Answer: B Diff: Terms: product differentiation Objective: AACSB: Reflective thinking 6) is an organization's ability to achieve low costs relative to competitors through productivity and efficiency improvements, elimination of waste, and tight cost control A) Strategy B) Product differentiation C) Cost leadership D) The balanced scorecard Answer: C Diff: Terms: cost leadership Objective: AACSB: Reflective thinking 7) An organization that is using the product differentiation approach would: A) focus on tight cost control B) carefully cultivate their brands C) provide products that are similar to competitors D) offer products at a lower cost than competitors Answer: B Diff: Terms: product differentiation Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 8) An organization that is using the cost leadership approach would: A) incur costs for innovative R&D B) provide products at a higher cost than competitors C) focus on productivity through efficiency improvements D) bring products to market rapidly Answer: C Diff: Terms: cost leadership Objective: AACSB: Reflective thinking Answer the following questions using the information below: Stewart Corporation plans to grow by offering a sound system, the SS3000, that is superior and unique from the competition Stewart believes that putting additional resources into R&D and staying ahead of the competition with technological innovations is critical to implementing its strategy 9) Stewart's strategy is: A) product differentiation B) downsizing C) reengineering D) cost leadership Answer: A Diff: Terms: product differentiation Objective: AACSB: Reflective thinking Answer the following questions using the information below: Riter Corporation manufactures water toys It plans to grow by producing high-quality water toys at a low cost that are delivered in a timely manner There are a number of other manufacturers who produce similar water toys Riter believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy 10) Riter's strategy is: A) product differentiation B) downsizing C) reengineering D) cost leadership Answer: D Diff: Terms: cost leadership Objective: AACSB: Ethical reasoning Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Answer the following questions using the information below: Meale Company makes a household appliance with model number X500 The goal for 2012 is to reduce direct materials usage per unit No defective units are currently produced Manufacturing conversion costs depend on production capacity defined in terms of X500 units that can be produced The industry market size for appliances increased 10% from 2011 to 2012 The following additional data are available for 2011 and 2012: Units of X500 produced and sold Selling price Direct materials (square feet) Direct material costs per square foot Manufacturing capacity for X500 (units) Total conversion costs Conversion costs per unit of capacity 2011 10,000 $100 30,000 $10 12,500 $250,000 $20 2012 11,000 $95 29,000 $11 12,000 $240,000 $20 11) Which strategy is Meale's Corporation pursuing? A) Product differentiation, because the units produced and sold increased B) Product differentiation, because total conversion costs decreased C) Cost leadership, because direct material costs per square foot increased D) Cost leadership, because the selling price decreased Answer: D Diff: Terms: cost leadership Objective: AACSB: Analytical skills 12) Strategy describes how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its overall objectives Answer: TRUE Diff: Terms: total quality management (TQM) Objective: AACSB: Reflective thinking 13) One of the five forces of industry analysis is understanding the bargaining power of your input suppliers Answer: TRUE Diff: Terms: five force industry analysis Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 14) Product differentiation is an organization’’s ability to achieve lower costs relative to competitors through productivity and efficiency improvements, elimination of waste, and tight cost control Answer: FALSE Explanation: Cost leadership is an organization's ability to achieve lower costs relative to competitors through productivity and efficiency improvements, elimination of waste, and tight cost control Diff: Terms: cost leadership Objective: AACSB: Reflective thinking 15) Product differentiation is an organization’’s ability to offer products or services perceived by its customers to be superior and unique relative to the products or services of its competitors Answer: TRUE Diff: Terms: product differentiation Objective: AACSB: Reflective thinking 16) The cost leadership strategy is for products and services that are similar to competitor's products and services Answer: TRUE Diff: Terms: cost leadership Objective: AACSB: Reflective thinking 17) The product differentiation strategy is probably best for a company if the engineering staff is more skilled at making process improvements than at creatively designing new products Answer: FALSE Explanation: The cost leadership strategy is probably best for a company if the engineering staff is more skilled at making process improvements than at creatively designing new products Diff: Terms: product differentiation Objective: AACSB: Reflective thinking 18) In general, profit potential increases with greater competition, stronger potential entrants, products that are similar, and tougher customers and suppliers Answer: FALSE Explanation: In general, profit potential decreases with greater competition, stronger potential entrants, products that are similar, and tougher customers and suppliers Diff: Terms: five force industry analysis Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 19) Bosely Corporation is reviewing its business strategy The first step for Bosely is to perform an industry analysis You have been hired to help the company go through the strategy formulation process Required: To perform the industry analysis, what areas should Bosely focus on and give at least one example of how Bosely can effectively deal with each area Answer: The industry analysis is composed of five areas: Competitors - How competitive is the industry for Bosely's particular product ? They can differentiate the product to reduce competition Potential entrants to the market - How easy is it for new competitors to join the market? Create barriers to entry, such as high capital requirements Equivalent products - Is there a substitute product available? Make continuous product improvements to reduce likelihood of equivalent products Bargaining power of customers - How many suppliers can customers access? Try to negotiate longterm purchase agreements Bargaining power of input suppliers - How many raw material vendors are there? Try to find alternative suppliers and negotiate the best price for raw materials Diff: Terms: five force industry analysis Objective: AACSB: Reflective thinking 20) Explain the product differentiation and the cost leadership strategies Answer: Product differentiation is an organization's ability to offer products or services perceived by its customers to be superior and unique relative to the products or services of its competitors Cost leadership is an organization's ability to achieve lower costs relative to competitors through productivity and efficiency improvements, elimination of waste, and tight cost control Diff: Terms: cost leadership, product differentiation Objective: AACSB: Reflective thinking Objective 13.2 1) is the fundamental rethinking and redesign of business processes to achieve improvements in critical measures of performance such as cost, quality, service, speed, and customer satisfaction A) Strategy B) Customer perspective C) Learning and growth perspective D) Reengineering Answer: D Diff: Terms: reengineering Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 2) Successful reengineering involves: A) cutting across functional lines to focus on the entire business process B) redefining the roles and responsibilities of employees C) using information technology D) All of these answers are correct Answer: D Diff: Terms: reengineering Objective: AACSB: Reflective thinking 3) The balanced scorecard measures an organization's performance from all of the following perspectives EXCEPT: A) financial B) government C) customer D) learning and growth Answer: B Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 4) Reengineering is the fundamental rethinking and redesign of business processes to achieve improvements in critical measures of performance such as cost, quality, service, speed, and customer satisfaction Answer: TRUE Diff: Terms: reengineering Objective: AACSB: Reflective thinking 5) Reengineering benefits are most significant when they focus on one business function rather than crossing functional lines of the business process Answer: FALSE Explanation: Reengineering benefits are most significant when they cut across functional lines to focus on the entire business process Diff: Terms: reengineering Objective: AACSB: Reflective thinking 6) Successful reengineering efforts generally involve changing the roles and responsibilities of employees Answer: TRUE Diff: Terms: reengineering Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 7) What is reengineering Can you contrast a reengineering approach to change with a kaizen approach to change? Answer: Reengineering is the rethinking of business processes, such as the order delivery process, to improve critical performance measures such as cost, quality, or customer satisfaction It can be contrasted to a kaizen approach to change in that reengineering is most often a sudden, drastic change, while a kaizen approach involves small, incremental but continual improvements Diff: Terms: reengineering Objective: AACSB: Analytical skills Objective 13.3 1) translates an organization's mission and strategy into a comprehensive set of performance measures that provide the framework for implementing its strategy A) Productivity component B) Product differentiation C) Cost leadership D) The balanced scorecard Answer: D Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 2) The purpose of the balanced scorecard is best described as helping an organization: A) develop customer relations B) mobilize employee skills for continuous improvements in processing capabilities, quality, and response times C) introduce innovative products and services desired by target customers D) translate an organization's mission and strategy into a set of performance measures that help to implement the strategy Answer: D Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 3) The first step to successful balanced scorecard implementation is clarifying the: A) organization's vision and strategy B) elements that pertain to value-added aspects of the business C) owner's expectations about return on investment D) objectives of all four balanced scorecard measurement perspectives Answer: A Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 4) The balanced scorecard is said to be "balanced" because it measures: A) short-term and long-term objectives B) financial and nonfinancial objectives C) internal and external objectives D) All of these answers are correct Answer: D Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 5) Balanced scorecard objectives are in balance when: A) debits equal credits B) financial performance measurements are less than the majority of measurements C) the measurements are fair D) the measurements reflect an improvement over the previous year Answer: B Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 6) The internal business processes perspective of the balanced scorecard comprises three subprocesses that address all of the following EXCEPT: A) innovative processes used to create new products, services, and processes B) motivating current employees C) providing service and support to the customer after the sale D) delivering existing products and services to best meet the needs of customers Answer: B Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 7) Identify the best description of the balanced scorecard's financial perspective To achieve our firm's vision and strategy: A) how can we obtain greater profits for the current year? B) how can we increase shareholder value? C) how will we obtain continuous improvements? D) how can we secure greater customer satisfaction? Answer: B Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 8) Identify the best description of the balanced scorecard's internal business processes perspective To achieve our firm's vision and strategy: A) how we lower costs? B) how we motivate employees? C) how can we obtain greater profits? D) what processes will increase value to customers? Answer: D Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 9) All of the following relate to the balanced scorecard's learning and growth perspective EXCEPT: A) How we achieve greater employee satisfaction? B) What new products we create? C) How we provide information systems with updated technology? D) How will we motivate and empower our employees? Answer: B Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 10) Measures of the balanced scorecard's financial perspective include: A) information system availability B) number of new patents C) revenue growth D) defect rates Answer: C Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 11) Measures of the balanced scorecard's financial perspective include all of the following EXCEPT: A) operating income B) customer satisfaction C) gross profit percentage D) cost reductions Answer: B Diff: Terms: Balanced Scorecard Objective: AACSB: Reflective thinking 10 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 4) A high level of precision between resources used and output produced exists with: A) engineered costs B) discretionary costs C) both engineered and discretionary costs D) neither engineered nor discretionary costs Answer: A Diff: Terms: engineered costs Objective: AACSB: Reflective thinking 5) Discretionary costs: A) have detailed processes B) are physically observable activities C) possess a high level of certainty D) are usually large total amounts Answer: D Diff: Terms: discretionary costs Objective: AACSB: Reflective thinking 6) Engineered costs: A) possess a high of level uncertainty B) are nonrepetitive C) are from physically observable activities D) have processes that are sketchy or unavailable Answer: C Diff: Terms: engineered costs Objective: AACSB: Reflective thinking 7) Conversion costs are an example of A) direct engineered costs B) indirect engineered costs C) discretionary costs D) unused capacity costs Answer: B Diff: Terms: engineered costs Objective: AACSB: Reflective thinking 39 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 8) Managers can reduce capacity-based fixed costs by measuring and managing A) unused capacity B) variable costs C) engineered costs D) discretionary costs Answer: A Diff: Terms: unused capacity, discretionary costs Objective: AACSB: Reflective thinking 9) Unused capacity is the amount of productive capacity available over and above the productive capacity employed to meet customer demand in the current period Answer: TRUE Diff: Terms: unused capacity, discretionary costs Objective: AACSB: Reflective thinking 10) Engineered costs have no measurable cause-and-effect relationship between output and resources used Answer: FALSE Explanation: Discretionary costs have no measurable cause-and-effect relationship between output and resources used Diff: Terms: engineered costs Objective: AACSB: Reflective thinking 11) Discretionary costs arise from periodic (usually yearly) decisions regarding the maximum amount to be incurred Answer: TRUE Diff: Terms: discretionary costs Objective: AACSB: Reflective thinking 12) Engineered costs contain a higher level of uncertainty than discretionary costs Answer: FALSE Explanation: Discretionary costs contain a higher level of uncertainty than engineered costs Diff: Terms: engineered costs, discretionary costs Objective: AACSB: Reflective thinking 40 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 13) Engineered costs result from a cause-and-effect relationship between the cost driver output and the resources used to produce that output Answer: TRUE Diff: Terms: engineered costs Objective: AACSB: Reflective thinking 14) Employee training and development cost is an example of an discretionary cost Answer: TRUE Diff: Terms: discretionary costs Objective: AACSB: Reflective thinking 15) It is relatively easy to identify unused capacity for discretionary costs Answer: FALSE Explanation: It is difficult to identify unused capacity for discretionary costs because of the lack of a cause-and-effect relationship Diff: Terms: unused capacity, discretionary costs Objective: AACSB: Reflective thinking 16) Downsizing is an integrated approach of configuring processes, products, and people to match costs to the activities that need to be performed to operate effectively and efficiently in the present and future Answer: TRUE Diff: Terms: downsizing Objective: AACSB: Reflective thinking 17) Downsizing discretionary costs is easier than downsizing engineered costs Answer: FALSE Explanation: Downsizing discretionary costs is more difficult because the unused capacity of discretionary costs is generally unknown Diff: Terms: downsizing, discretionary costs, engineered costs Objective: AACSB: Reflective thinking 18) Downsizing often means eliminating jobs, which can have an adverse effect on employee morale Answer: TRUE Diff: Terms: downsizing Objective: AACSB: Reflective thinking 41 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 19) Define engineered and discretionary costs and give two examples of each Answer: An engineered cost results from a cause-and-effect relationship between the cost driver output and the resources used to produce that output An example of an engineered cost would be direct materials in the production of products Other examples of engineered costs might include shipping costs or electrical costs A discretionary cost has two features The first feature is that the cost arises from a periodic decision regarding the amount of cost to be incurred The second feature is that no measurable cause-and-effect relationship exists between the output and the resources used An example of a discretionary cost would be the cost of advertising for a product, the amount spent on researching new products, or employee training expenses Diff: Terms: engineered costs, discretionary costs Objective: AACSB: Reflective thinking Objective 13.6 1) Unused capacity is difficult to determine for: A) engineered costs B) discretionary costs C) both engineered and discretionary costs D) neither engineered nor discretionary costs Answer: B Diff: Terms: discretionary costs Objective: AACSB: Reflective thinking 2) To effectively deal with unused capacity a company: A) may downsize B) may retain some unused capacity for future growth C) should consider it a waste of resources and eliminate all unused capacity D) Both A and B are correct Answer: D Diff: Terms: downsizing, unused capacity Objective: AACSB: Reflective thinking 3) Downsizing: A) may include eliminating jobs B) should be done within the context of a company's overall strategy C) is most difficult with discretionary costs D) All of these answers are correct Answer: D Diff: Terms: downsizing Objective: AACSB: Reflective thinking 42 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 4) Rightsizing is another term for: A) growth management B) downsizing C) price recovery analysis D) cost recovery analysis Answer: B Diff: Terms: downsizing Objective: AACSB: Reflective thinking 5) What actions can management take when unused capacity is identified? A) eliminate the unused capacity B) attempt to grow to utilize the unused capacity C) Both A and B are correct D) Neither A nor B are correct Answer: C Diff: Terms: downsizing, unused capacity Objective: AACSB: Reflective thinking 6) Can a company identify unused capacity and, if so, how can unused capacity be managed? Answer: It is relatively easy for a company to recognize unused capacity for engineered costs, but it is more difficult for a company to recognize unused capacity for discretionary costs Downsizing, or rightsizing, is an approach to managing unused capacity by matching costs to the activities that need to be performed Diff: Terms: engineered costs, discretionary costs, downsizing, rightsizing Objective: AACSB: Reflective thinking Objective 13.A 1) The lower the inputs for a given set of outputs or the higher the outputs for a given set of inputs, the higher the level of: A) standard costs B) sales C) productivity D) labor costs Answer: C Diff: Terms: productivity Objective: A AACSB: Reflective thinking 43 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 2) Yield variances: A) reveal the effect of substitution within a single factor of production B) address the productivity of a single component of one factor of production C) capture both substitutions between factors of production as well as within factors of production D) reveal the effect of substitution within multiple factors of production Answer: B Diff: Terms: productivity component Objective: A AACSB: Reflective thinking 3) Partial productivity multiplied by the quantity of input used results in: A) expected production B) budgeted output C) actual output D) a ratio Answer: C Diff: Terms: partial productivity Objective: A AACSB: Reflective thinking 4) measures the relationship between actual inputs used and actual outputs achieved A) Total factor productivity B) Partial productivity C) Productivity D) Product yield variance Answer: C Diff: Terms: productivity Objective: A AACSB: Reflective thinking 5) compares the quantity of output produced with the quantity of a single input used A) Total factor productivity B) Partial productivity C) Productivity D) Product yield variance Answer: B Diff: Terms: partial productivity Objective: A AACSB: Reflective thinking 44 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6) Ali Company provided the following information: Budgeted input 39,000 gallons Actual input 35,800 gallons Budgeted production 40,000 units Actual production 38,000 units What is the partial productivity ratio? A) 0.97 units per gallon B) 1.02 units per gallon C) 1.06 units per gallon D) 1.12 units per gallon Answer: C Explanation: C) PP = 38,000 / 35,800= 1.06 units per gallon Diff: Terms: partial productivity Objective: A AACSB: Analytical skills 7) Michael Company provided the following information: Budgeted input 19,500 gallons Actual input 17,900 gallons Budgeted production 10,000 units Actual production 19,000 units What is the partial productivity ratio? A) 0.97 units per gallon B) 1.02 units per gallon C) 1.06 units per gallon D) 1.12 units per gallon Answer: C Explanation: C) PP =19,000/ 17,900 = 1.06 units per gallon Diff: Terms: partial productivity Objective: A AACSB: Analytical skills 45 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 8) Kirk Company provided the following information: Budgeted input 24,000 gallons Actual input 30,000 gallons Budgeted production 10,000 units Actual production 9,500 units What is the partial productivity ratio? A) 0.32 units per pound B) 0.33 units per pound C) 0.40 units per pound D) 3.16 units per pound Answer: A Explanation: A) PP = 9,500/ 30,000 = 0.32 units per pound Diff: Terms: partial productivity Objective: A AACSB: Analytical skills 9) Which of the following statements is true? A) The lower the partial productivity ratio, the greater the productivity B) Productivity has increased when the partial productivity is high C) Prices of inputs are incorporated in the partial productivity ratio D) The partial productivity ratio measures the number of outputs produced per multiple input Answer: B Diff: Terms: partial productivity, productivity Objective: A AACSB: Reflective thinking 10) What is the direct manufacturing labor partial productivity for Dangerfield Company, assuming 40,000 big and tall sport jackets were produced during 2011 and 160,000 direct manufacturing laborhours were used? A) 0.25 unit per direct manufacturing labor-hour B) 0.50 unit per direct manufacturing labor-hour C) 0.75 unit per direct manufacturing labor-hour D) 1.00 unit per direct manufacturing labor-hour Answer: A Explanation: A) 40,000 / 160,000 = 0.25 Diff: Terms: partial productivity Objective: A AACSB: Analytical skills 46 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 11) What is the direct manufacturing labor partial productivity, assuming 20,000 units were produced during 2011 and 80,000 direct manufacturing labor-hours were used? A) 0.25 unit per direct manufacturing labor-hour B) 0.50 unit per direct manufacturing labor-hour C) 0.75 unit per direct manufacturing labor-hour D) 1.00 unit per direct manufacturing labor-hour Answer: A Explanation: A) 20,000 / 80,000 = 0.25 Diff: Terms: partial productivity Objective: A AACSB: Analytical skills 12) What terms describe the relationship between different quantities of inputs consumed and the quantities of output produced? A) budgeted costs or actual costs B) production technology or production function C) static budget or flexible budget D) production technology or production setup Answer: B Diff: Terms: productivity Objective: A AACSB: Reflective thinking 13) Total factor productivity will increase if: A) technical productivity occurs B) the company uses more total inputs per output C) the company incurs fewer costs per input D) current technology becomes obsolete Answer: A Diff: Terms: total factor productivity (TFP) Objective: A AACSB: Reflective thinking 14) One problem with total factor productivity revolves around which of the following? A) the measurement of combined productivity of all inputs B) the control operations personnel have over inputs C) the control operations personnel have over outputs D) the marketing mix determined by management Answer: A Diff: Terms: total factor productivity (TFP) Objective: A AACSB: Reflective thinking 47 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 15) is the ratio of the quantity of output produced to the costs of all inputs used, where the inputs are combined on the basis of current period prices A) Total factor productivity B) Partial productivity C) Productivity D) Product yield variance Answer: A Diff: Terms: total factor productivity (TFP) Objective: A AACSB: Reflective thinking 16) The partial productivity of overhead resources can be measured by considering the cost driver as: A) budgeted input B) the denominator C) the fixed input D) the numerator Answer: D Diff: Terms: partial productivity Objective: A AACSB: Reflective thinking 17) Which of the following statements about productivity measures is FALSE? A) It may be stated in terms of dollars B) It provides a convenient and easily interpreted means of aggregating across different physical outputs C) The productivity measure may not be made for companies with multiple products D) The key is the identification of cost drivers Answer: C Diff: Terms: productivity Objective: A AACSB: Reflective thinking 18) The average number of student credit hours taught per faculty member is an example of a(n): A) expected performance measure B) budgeted productivity measure C) standard productivity measure D) partial productivity measure Answer: D Diff: Terms: partial productivity Objective: A AACSB: Reflective thinking 48 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 19) Productivity measures the relationship between actual inputs used (both quantities and costs) and standard outputs produced Answer: FALSE Explanation: Productivity measures the relationship between actual inputs used (both quantities and costs) and actual outputs produced Diff: Terms: productivity Objective: A AACSB: Reflective thinking 20) Partial productivity equals quantity of input used divided by quantity of individual output produced Answer: FALSE Explanation: Partial productivity equals quantity of output produced divided by quantity of individual input used Diff: Terms: partial productivity Objective: A AACSB: Reflective thinking 21) Total factor productivity (TFP) is the ratio of the quantity of output produced to the costs of all inputs used, where the inputs are combined on the basis of current period prices Answer: TRUE Diff: Terms: total factor productivity (TFP) Objective: A AACSB: Reflective thinking 22) Although total factor productivity (TFP) measures are comprehensive, operations personnel find financial TFP measures more difficult to understand and less useful than physical partial productivity measures in performing their tasks Answer: TRUE Diff: Terms: total factor productivity (TFP) Objective: A AACSB: Reflective thinking 49 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 23) Power Company has been unhappy with the financial accounting variances that its cost accounting system has been producing, because its managers believe that there is more to evaluating an operation than just examining accounting numbers Therefore, it has started gathering data to assist in the examination of nonfinancial results of operations The following information relates to the manufacture of remote control units for televisions, radios, and stereo components: 2011 2012 Remote control units produced and sold 80,000 100,000 Direct manufacture labor-hours 12,000 13,200 Direct materials used (sets) 80,600 100,500 Direct manufacture cost per hour $18 $20 Direct materials cost per set $31 $32 Required: a What is the partial productivity of direct materials for each year? b What is the partial productivity of direct manufacturing labor for each year? c Did each area improve between 2011 and 2012? Explain d What will be the projected direct material and labor needs for 2013 if remote control units increase by 12,000 units, assuming Power Company applies the constant returns to scale technology? Answer: a 2011 Partial productivity of direct materials = 80,000/80,600 = 0.993 2012 Partial productivity of direct materials = 100,000/100,500 = 0.995 b 2011 Partial productivity direct manufacturing labor = 80,000/12,000 = 6.67 2012 Partial productivity direct manufacturing labor = 100,000/13,200 = 7.58 c Yes, both areas showed improvement because the ratios went up d Production increase = 12,000/100,000 = 12 percent Projected direct material sets = 100,500 × 1.12 = 112,560 sets Projected direct manufacturing labor = 13,200 × 1.12 = 14,784 hours Diff: Terms: partial productivity Objective: A AACSB: Analytical skills 50 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 24) Grader Company manufactures road graders Because its managers all have engineering backgrounds, they prefer nonfinancial information for their decision-making models Therefore, they require the accountants gather data to assist in the examination of nonfinancial results of operations The following information relates to the manufacture of a paver: Units produced and sold Direct manufacture labor-hours Direct materials used (tons) Direct manufacture cost per hour Direct materials cost per ton 2011 6,800 136,000 29,000 $21 $431 2012 5,600 115,200 24,400 $22 $443 Required: a What is the partial productivity for direct materials for each year? b What is the partial productivity for direct manufacturing labor for each year? c What is the total factor productivity for each year? Answer: a 2011 Partial productivity of direct materials = 6,800/29,000 = 0.234 2012 Partial productivity of direct materials = 5,600/24,400 = 0.230 b 2011 Partial productivity for direct manufacturing labor = 6,800/136,000 = 0.050 2012 Partial productivity for direct manufacturing labor =5,600/115,200 = 0.049 c 2011 Direct materials = 29,000 × $431 = Direct manufacturing labor = 136,000 × $21 = Total 2012 Direct materials = 24,400 × $443 = Direct mfg labor = 115,200 × $22 = Total $12,499,000 2,856,000 $15,355,000 $10,809,200 2,534,400 $13,343,600 2011 Total factor productivity = 6,800/$15,355,000 = 0.00044 2012 Total factor productivity = 5,600/$13,343,600 = 0.00042 Diff: Terms: partial productivity, total factor productivity (TFP) Objective: A AACSB: Analytical skills 51 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 25) Fairytale Weddings manufactures wedding dresses The following information relates to the manufacture of gowns in its Perth plant: Units produced and sold Direct manufacture labor-hours Direct materials used (square yards) Direct manufacture cost per hour Direct materials cost per yard 20X1 43,000 22,000 130,000 $16 $10 20X2 52,600 26,000 152,000 $17 $11 Required: Prepare an analysis of change in annual costs from 20X1 to 20X2 including direct materials, direct manufacturing labor, and total inputs Answer: Direct materials: Actual 20X1 costs: 130,000 × $10 = $1,300,000 20X1 input for 20X2 output: 130,000 × 52,600/43,000 × $10 =1,590,233 Output adjustment $ 290,233 U 20X1 input for 20X2 output: = $1,590,233 20X1 input with 20X2 costs: 130,000 × 52,600/43,000 × $11 =1,749,256 Input price change $ 159,023 U 20X1 input with 20X2 costs: = 20X2 costs: 152,000 × $11 = Productivity change $1,749,256 1,672,000 $ 77,256 F Direct manufacturing labor: Actual 20X1 costs: 22,000 × $16 = $352,000 20X1 input for 20X2 output: 22,000 × 52,600/43,000 × $16 = 430,586 Output adjustment $ 78,586 U 20X1 input for 20X2 output: = $430,586 20X1 input with 20X2 costs: 22,000 × 52,600/43,000 × $17 = 457,498 Input price change $ 26,912 U 20X1 input with 20X2 costs: = 20X2 costs: 26,000 × $17 = Productivity change $457,498 442,000 $ 15,498 F All inputs: Output adjustment: $290,233 U + $78,586 U = Input price change: $159,023 U + $26,912 U = Productivity change: $77,256 F + $15,498 F = Diff: Terms: productivity, partial productivity Objective: A AACSB: Analytical skills $368,819 U $185,935 U $ 92,754 F 52 Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 26) Ralph Company has been very aggressive in developing various types of financial and nonfinancial measurement schemes to help with the evaluation of its manufacturing processes It appears that some of the managers are suboptimizing in that their decision processes are geared solely for their department's benefit, sometimes to the detriment of the organization as a whole Required: What changes in the evaluation system could the company implement to help minimize the suboptimization of the managers' decision-making process? Answer: The company could implement a total factor productivity concept Its major advantage is that it measures the combined productivity of all inputs to produce outputs and, therefore, explicitly evaluates substitution among inputs For example, if buying a cheap material makes the cost of materials look favorable but causes more labor-hours, therefore causing labor costs to be unfavorable, suboptimization may be occurring The total factor productivity takes into account both the materials costs and the labor costs and if they offset each other, that is fine, but if they not offset, then the variance will be so noted Diff: Terms: total factor productivity (TFP) Objective: A AACSB: Reflective thinking 27) Total factor productivity (TFP) is easy to compute for a single-product company When dealing with a multiproduct company, one of two adjustments must be made What are these potential adjustments? Answer: One of the following two adjustments must be made in the TFP calculations: Convert the outputs from physical measures to a dollar value common denominator, analogous to the multiple input case Allocate the input costs to the different outputs This is appropriate when the inputs can be reasonably allocated to the different outputs Diff: Terms: total factor productivity (TFP) Objective: A AACSB: Reflective thinking 53 Copyright © 2012 Pearson Education, Inc ... and test bank, visit http://downloadslide.blogspot.com 8) An organization that is using the cost leadership approach would: A) incur costs for innovative R&D B) provide products at a higher cost. .. conversion costs decreased C) Cost leadership, because direct material costs per square foot increased D) Cost leadership, because the selling price decreased Answer: D Diff: Terms: cost leadership... reengineering D) cost leadership Answer: D Diff: Terms: cost leadership Objective: AACSB: Ethical reasoning Copyright © 2012 Pearson Education, Inc To download more slides, ebook, solutions and test bank,